Stocks are not in a bubble, investors should keep buying: Wells Fargo
For investors worried about the inflated market value, Wells Fargo said no bubble is forming. The S&P 500 currently trades at about 25 times forward earnings after a 27% rally, making today’s valuation look expensive at first glance since the 30-year price-to-earnings ratio is 19 times, it said. Wells Fargo. However, the Wall Street firm argued that it may be unfair to compare with the historical average because the index is performing better than before. Wells Fargo pointed out that the profitability ratios of S & P 500 companies have nearly doubled over the past 15 years, while total debt to income has halved over the same period. “Stocks are not in a bubble, in our view, and investors shouldn’t let an above-average P/E ratio keep them from driving the bull market we see in 2025,” Austin Pickle, Wells Fargo’s investment strategy analyst, said in a note. .SPX YTD mountain S & P 500 The Wall Street bank expects the S & P 500 to rise to 6,600 by the end of 2025, which equates to a gain of about 9% next year. The target is in line with the median forecast among top Wall Street strategists, which stands at 6,630 by 2025, according to CNBC Pro’s Market Strategist survey. Wells Fargo believes deregulation under President-elect Donald Trump could help support earnings growth. The firm also said investors should look for pullbacks in the market to find entry points going forward. “Periods of volatility should be expected as 5-10% pull back. In such a situation, we expect to find an opportunity to buy,” said Wells.
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